Egypt and the aversion of investors
Egypt’s number one enemy is neither terrorism nor the opposition – it is the economy
Egypt’s number one enemy is neither terrorism nor the opposition – it is the economy. Successive governments in the country have promised reforms but hardly succeeded. It’s the enemy which can shake the pillars of the state again and creatie chaos – more than the Muslim Brotherhood and even the armed opposition groups.
Economy is also the only challenge that can be overcome as compared to other challenges staring Egypt in the face. It is an important battle but the situation can be improved. The government has spoken about a new phase of development and started its era with promises which it began to be implemented.
However, massive projects may not be enough to save the economy as burdens increase and difficulties continue to exist. Perhaps there’s a massive project which we are not aware of and which will build an economy based on the aspirations of its 90 million people.
We believe in Egypt because it has a huge market. It’s the second biggest economy in Africa after Nigeria. Yet, global companies are losing confidence in Egypt due to political propaganda, bureaucracy’s inability to open up or due to restraints imposed on the few investors who have taken the risk by going to work in Egypt.
This does not diminish the accomplishments made so far. The new Suez Canal was completed in one year. It was a massive construction engineering project and it was an important test of the government’s will - a test it passed. The second question is: does the government have new ideas?
All Egyptian governments have executed multiple projects but none of them proposed a plan to develop the country’s economy. All we’ve had for decades are promises for development.
We must exclude the first experience of change led by late President Anwar al-Sadat when he opened the economy as part of political change following the Camp David Agreement. Sadat was the first to adopt this approach. Socialist countries, mainly the Soviet Union, and the socialist eastern European countries followed suit.
Egypt can do better with its huge resources and capabilities but we fear that the state’s rivals will succeed at distracting its attention and keeping it occupied with political challengesAbdulrahman al-Rashed
Journey of reform
Egypt’s consecutive governments did not complete this journey of reform and development, unlike Poland, Bulgaria and other such countries. What slowed down this path of development is that Cairo focused on confronting political challenges. Former president Hosni Mubarak developed an ambitious reform transition plan; however it deviated from its path as a result of political and administrative tussles.
Mubarak focused on the game of political balances with the opposition in the street and with the political parties within the regime and leaders in governance. And so years passed until the government found itself incapable of fulfilling people’s livelihood needs. Meanwhile the political opposition was waiting to seize the moment for change and the moment came in 2011.
President Abdel-Fattah al-Sisi’s era started with the talk of development, change and prosperity. This was the third such occasion since the end of the socialist economic system in the 1970’s. Egypt promised to attract international investments and this first required reforming legislations as well as developing a comprehensive economic plan that acts as a roadmap.
Egypt can do better with its huge resources and capabilities but we fear that the state’s rivals will succeed at distracting its attention and keeping it occupied with political challenges.
We know that the Egyptian opposition, regional struggles and administrative disputes are enough to consume the government’s energy and distract it from the more important promises. We cannot, however, underestimate the extent of harm which the opposition has caused to the country’s economy.
Tourism, which is one of the most important financial resources, has declined by 66 percent during the first quarter this year. There is no doubt that this has been due to terrorism. Oil price drop also affects Egypt as it has oil and depends on selling the commodity in return for hard currency. Egyptian laborers who work in oil-rich countries also depend on it.
Egypt’s situation will continue to be difficult if it doesn’t implement reforms which former governments have avoided. The most important step will be modernizing legislations which are the causes behind investor aversion. Egypt’s economic success will make the country better for its domestic constituents and make it a strong and influential state.
This article was first published in Asharq al-Awsat on May 22, 2016.
Abdulrahman al-Rashed is the former General Manager of Al Arabiya News Channel. A veteran and internationally acclaimed journalist, he is a former editor-in-chief of the London-based leading Arab daily Asharq al-Awsat, where he still regularly writes a political column. He has also served as the editor of Asharq al-Awsat’s sister publication, al-Majalla. Throughout his career, Rashed has interviewed several world leaders, with his articles garnering worldwide recognition, and he has successfully led Al Arabiya to the highly regarded, thriving and influential position it is in today. He tweets @aalrashed